How FinCEN Stole Christmas: The Corporate Transparency Act, Year 1

As of January 14, 2025 all information-filing requirements mandated by the Corporate Transparency Act (“CTA”) are suspended. If, when, and the extent to which this suspension will end is currently being considered by the United States Supreme Court and U.S. Court of Appeals for the Fifth Circuit. This article considers how what might have been anticipated to be a peaceful year-end holiday season saw all three levels of federal courts (District, Circuit, and Supreme), Congress and a bureau of the U. S. Department of Treasury frantically seeking to determine the future and timing of CTA reporting obligations, and how these events might shape future developments of the CTA.

On December 3, 2024, in Texas Top Cop Shop, Inc. v. Garland (“Top Cop District Litigation”)[3] brought by businesses and an individual owner (“plaintiffs” or “plaintiffs-appellees”)[4] against the Financial Crimes Enforcement Network (“FinCEN”), the bureau of the United States Department of the Treasury that administers the CTA; the United States Attorney General; and the Secretary of the Treasury (the “government”), the court issued a nationwide[5] preliminary injunction enjoining the CTA.[6] In response to the preliminary injunction, on December 23, 2024, FinCEN gave notice it would not enforce the CTA for so long as the injunction were in place.[7]

In response to the preliminary injunction, on December 5, 2024 the government filed a notice of appeal to the U.S. Court of Appeals for the Fifth Circuit (“Top Cop Fifth Circuit Litigation”)[8] and, on December 11, 2024, a Motion to Stay Preliminary Injunction Pending Appeal[9] in the Top Cop District Litigation. On December 12, 2024, the District court judge ordered the plaintiffs to respond to the government’s motion by December 16, 2024,[10] and on December 16, the plaintiffs filed a response,[11] followed by a government reply the next day. [12] On the December 17, the District Court judge denied the government’s motion.[13]

On December 9, the Notice of Appeal that the government had filed with the Fifth Circuit was docketed (Top Cop Fifth Circuit Litigation).[14] On December 13, the government filed a Motion for a stay of the preliminary injunction pending appeal,[15] and a Fifth Circuit motion panel requested that the plaintiffs-appellees file a response by December 17, and the government file a reply by December 19.[16] On December 17, the plaintiffs-appellees filed a Response/Opposition,[17] and the government filed a Reply on December 19.[18] On December 23, the motions panel in an Unpublished Order granted the government’s motion for stay of the preliminary injunction pending appeal,[19] and did not extend the due date for CTA filings.[20] Shortly after the release of the Unpublished Order, FinCEN issued a BOI Alert (December 23, 2024) extending the filing dates for information reporting to January 13, 2025 or later.[21] On December 24, the plaintiffs-appellees filed a motion for rehearing en banc,[22] in response to which the court issued a Court Directive that a Response/Opposition to the motion for rehearing should be filed by December 31.[23]

The lifting of the preliminary injunction was short-lived. On December 26, 2024, a merits panel of the Fifth Circuit vacated the stay portion of the order of the motions panel, effectively reinstating the preliminary injunction.[24] The merits panel established a briefing schedule (concluding on February 28, 2025)[25] and oral arguments (on March 25, 2025)[26] for a determination of the government’s motion to stay the preliminary injunction. The plaintiffs-appellees’ motion for en banc hearing was dismissed as moot.[27]

Continuing the flurry of holiday season activity, on December 31, 2024, while the government’s motion for a stay of the preliminary injunction was still pending before the Fifth Circuit, the Solicitor General, on behalf of the government, commenced an action in the United States Supreme Court (the Top Cop Supreme Court Litigation)[28] by filing an Application for a Stay of the Injunction Issued By the United States District Court for the Eastern District of Texas (“Supreme Court Application for Stay”).[29] The Supreme Court Application for Stay argues:

  1. the district court gave insufficient deference to the presumed validity of laws enacted by Congress;[30]
  2. that the CTA is within Congress’ authority under the Commerce Clause; [31]
  3. that the Constitutional Necessary and Proper Clause supports Congress’ authority to adopt the CTA;[32]
  4. established law supports that laws may require that persons provide requested information; [33]
  5. the plaintiffs have not satisfied the high standards required for a facial challenge to the constitutionality of a statute; [34]
  6. the equities support lifting the stay in that the district court failed to account for the harm to the Government in not allowing the CTA to be enforced as a tool for addressing identified problems such as domestic and international money-laundering and tax evasion (Petition pp. 26-30);
  7. that the merits panel of the Fifth Circuit did not apply the correct standards in lifting the stay of the injunction;[35] and
  8. the district court’s nationwide injunction is unwarranted.[36]

The Supreme Court Application for Stay also invited the Supreme Court to grant certiorari to consider the proper standard for the issuance of a nationwide injunction.[37] As to the nationwide reach of the preliminary injunction, the Supreme Court Application for Stay at p. 4 argues:

At a minimum, this Court should narrow the district court’s vastly overbroad injunction. A court of equity may grant relief only to the parties before it. The district court violated that principle by issuing a universal injunction purporting to enjoin the Act itself and forbidding the enforcement of the Act even against non-parties.  Several Members of this Court have recognized that such universal relief contradicts Article III and established equitable principles and have urged clarification of these principles in an appropriate case — but the Court’s antecedent determination on a threshold procedural issue or the merits in prior cases has obviated the need to re-solve the remedial question. Because the lower courts need guidance on the propriety of universal injunctions, this Court may additionally wish to treat this application as a petition for a writ of certiorari before judgment presenting the question whether the district court erred in entering preliminary relief on a universal basis.

The Supreme Court Application for Stay was assigned initially Justice Alito, and on January 3 he issued instructions to the plaintiffs-appellees to respond not later than 4:00 pm on Friday, January 10, 2025. That Response Brief was filed well before the deadline, and on January 13 the Government filed a Reply Brief. [38]

Thus, the current enforceability and ultimate validity is currently before three federal courts, none of which has reached a final judgment of constitutionality of the statute. After a month of legal contention, the preliminary injunction issued in the Top Cop District Court Litigation is still in effect although that may change at any time. If the preliminary injunction is lifted, when the information disclosures that would have been filed during the hiatus will be subject to whatever administrative grace FinCEN or the acting court chooses to afford them.

The balance of this article discusses the background of the CTA and its implementing reporting regulations and the machinations they have undergone over the year-end holidays, and how this history may offer a clue to what will happen to the CTA in the future.

The CTA: A Grinch-ish “Gift”

As of December 1, 2024, the CTA[39] as supplemented by final regulations prescribed under it (“Reporting Rule”)[40] require each reporting company[41] created or registered[42] on or after January 1, 2024 (a new entity)[43] to file a beneficial ownership information report (“BOIR”) with the Financial Crimes Enforcement Network (“FinCEN”), the bureau of the U.S. Department of the Treasury that administers the CTA, on or before ninety days after creation or registration if created or registered in 2024 and thirty days after creation or registration if created or registered after 2024.[44]

Under the CTA, the Reporting Rule aims to “minimize burdens on reporting companies associated with the collection of beneficial ownership information, including by eliminating duplicative requirements,” while at the same time aiming to “ensure the beneficial ownership information reported to FinCEN is accurate, complete, and highly useful.”[45] Thus, while there are still many questions about the application of the reporting requirements to reporting companies, FinCEN is actively considering new regulations to make the information it collects more useful to the banking industry.[46]

Nonetheless, the CTA has been riddled with nuanced problems and counterintuitive applications that have been an irritant (not always minor) for even some simple business organizations. For larger, more sophisticated organizations, the CTA (particularly as implemented by the Reporting Rule) can be a cipher for a number of organizations that, without any obvious reason, are subject to the statute, including (i) homeowners associations that may exempt from BOIR reporting depending upon the federal tax exemption for which they qualify,[47] (ii) companies that have separated their employees from the organization in which the company’s value is located, (iii) companies in bankruptcy and subject to the oversight of a Chapter 7 bankruptcy trustee, (iv) companies that have wound up their affairs, (v) limited liability companies (“LLCs”) whose organization was never completed by the admission of a member, (vii) limited liability partnerships,[48] and (viii) companies having multiple classes of ownership. These issues have earned the CTA pride of place as a program that Project 2025 would like to exterminate.[49]

On-Again, Off-Again, On-Again Christmas Celebrations

Top Cop is not the only litigation has been filed challenging the CTA and the Reporting Rule. The CTA has been under attack from many small businesses and small business associations as being unconstitutional either as an enactment beyond the power of Congress or an invasion of the constitutional rights of small businesses and their owners. Numerous cases in which these issues are being considered are currently pending in federal courts around the country.

In one case in the early part of 2024, National Small Business United v. Yellen (“NSBU”),[50] the trial court, a federal district court in Alabama, entered a final declaratory judgment concluding that the CTA exceeds the Constitution’s limits on Congress’s power and enjoining the Department of the Treasury and FinCEN from enforcing the CTA against those plaintiffs. FinCEN then issued an alert (“NSBU Alert”)[51] to the effect that FinCEN would not enforce the CTA against the plaintiffs as long as the judgment remains in effect. The government appealed NSBU (although not the injunction separately) to the U.S. Court of Appeals for the Eleventh Circuit; the case is ongoing.[52] In addition, FinCEN extended the filing deadlines for reporting companies located in the areas designated both by the Federal Emergency Management Agency (“FEMA”) as qualifying for individual or public assistance and by the Internal Revenue Service as eligible for tax-filing relief.[53] In all other respects, the Reporting Rule continued to govern the BOIR reporting regime.

Later, in the fall of 2024, two other federal district courts declined to issue an injunction and preliminarily found the CTA constitutional.[54]

At the same time the government was filing its appeal to the Fifth Circuit, Congress was considering a one-year extension on the filing deadline for reporting companies formed or created before January 1, 2024 (“existing entities”) as part of a continuing resolution, but the extension was deleted from the final enactment of the American Relief Act, 2025.[55]

On Christmas Eve, after a hectic preholiday week punctuated by furious activities by all three branches of government,[56] the infelicitous rolling out of the principal aspects of the CTA came to rest with some reporting companies formed after September 3, 2024 being granted by FinCEN an extension of time within which to file their initial BOIRs and the balance of the CTA reporting regime continuing in effect. Based upon BOI Alert (December 23, 2024), the due dates for initial BOIRs were set as follows:

Date of Creation or Registration

Number Days in Which to File Initial BOIR or Update to BOIR or FinCEN Identifier

Due Date for Filing BOIR as of December 23, 2024

From

To

Before 1/1/2024[57]

At least 379 days

January 13, 2025

1/1/2024

9/3/2024[58]

90 days

Within 90 days of creation or registration

9/4/2024

9/24/2024[59]

Between and 111 and 131 days

January 13, 2024

9/25/2024

12/2/2024[60]

90 days

Within 90 days of creation or registration

12/3/2024

12/23/2024[61]

111 days

Within 111 days of creation or registration

12/24/2024

12/31/ 2024[62]

90 days

Within 90 days of creation or registration

On or after January 1, 2025

30 days

Within 30 days of creation or registration

Change in, or correction to, a filed BOIR

30 days

Within 30 days of change or discovery of inaccurate content

Change in, or correction to, a FinCEN Identifier[63]

30 days

Within 30 days of change or discovery of inaccurate content

Following the Fifth Circuit’s order lifting of the stay of the preliminary injunction, FinCEN updated the BOI Alert (December 23, 2024) on December 27, 2024 (thereby making it the BOI Alert (December 27, 2024)) to include language discussing the Top Cop Fifth Circuit Court Order.[64] Among other things, BOI Alert (December 27, 2024) no longer mentioned the extension of due dates described in BOI Alert (December 23, 2024). Still, the due dates in the BOI Alert (December 23, 2024) remain of some interest because they suggest how FinCEN may respond if the preliminary injunction is lifted—that is, by affording a limited extension of time to some of the reporting companies that have been affected by the preliminary injunction.[65]

All I Want for Christmas Is for the CTA to Have No Teeth

And so, as we have passed January 1, 2025, the date on which all existing entities were to have filed their BOIRs, where are we and why?

While the exact number of reporting companies that have filed their BOIRs is uncertain, pleadings in the Top Cop District Litigation suggested that at the time the preliminary injunction was issued on December 3, 2024, just approximately ten million of the estimated thirty-six million reporting companies had filed. Since this date, BOIRs have not been required, although FinCEN has continued to accept them.[66] The hiatus in the requirement that BOIRs be filed will continue unless and until (i) the Fifth Circuit grants the government’s motion to stay the preliminary injunction, (ii) the Top Cop District Litigation is finally resolved in the government’s favor on the merits, or (iii) the government prevails on the Supreme Court Application for a Stay either because Supreme Court stays the preliminary injunction or because it determines that the preliminary injunction is inappropriate. The CTA is certainly not dead; those who have not complied when they were required to before December 3, 2024, are not exonerated; and, as demonstrated by the Top Cop motions panel Order,[67] all of the requirements may come roaring back with very little time to prepare the required BOIRs.

Why are we in this situation? Is it because there is overwhelming support for money laundering, terrorist financing, and human trafficking? Is it because Americans, who readily surrender personal identifying information on technology platforms, are concerned about their privacy? We think not.[68] Rather, the CTA has been adopted to satisfy an international consortium of law enforcement officials, most of whom operate under national legal systems that already require much more transparency of organizations than does the United States, particularly considering the strongly state-centric regulations of organizations. Similarly, compliance with Financial Action Task Force (“FATF”) mandates have entailed an attempted redefinition of the role of lawyers from honest advocates and advisers of clients to agents of law enforcement.[69] Interestingly, since the adoption of CTA based upon the FATF’s mandates, the United States has narrowly elected an administration that is highly suspicious of international mandates and that has had its anticipated policies described in a document that advocates for a repeal of the CTA.[70]

Over the four years that FinCEN has had to implement has declined to address many issues that have troubled those attempting to comply with the CTA—or, when addressing the issues, it has provided unworkable answers.[71] These unworkable rules are imposed on millions of organizations at a cost to the organizations of billions of dollars, by FinCEN’s own reckoning. Thus, rather than trying to find an efficient way of dealing with the problems that FinCEN was trying to address, the CTA merely attempts to impose an international standard on U.S. organizations. What could possibly go wrong?


  1. Other titles considered for this update included “What Could Possibly Go Wrong?”; “Season’s Greetings, Where’s Your Pleadings?”; “It Seemed Like a Good Idea at the Time”; “If You’re Not Confused, You Aren’t Paying Attention”; “Nailing Jell-O® to the Wall”; and “How I Spent My Christmas Vacation.” In keeping with the spirit of the holiday, Chat GPT (as posted by Jeffrey Unger) chimed in with the following:

    Oh, FinCEN’s a whirlwind, it’s buzzing with schemes,
    With reports and compliance and anti-fraud dreams!
    It watches the dollars, the nickels, and dimes,
    To catch all the sneaky and dubious crimes.

    But lo, the law stumbled—it faced a tough fight,
    Declared unconstitutional, it dimmed FinCEN’s light.
    An injunction was granted; the work hit a wall,
    No chasing bad money, no watching at all!

    Then the injunction was lifted, the chase was revived,
    FinCEN back at it, its mission survived.
    But oh, once again, it was halted in court,
    Enjoined once more—what a legal report!

  2. The authors received thoughtful comments from Jay Adkisson, Bill Callison, Eric Dante, Cathy Krendl, Herrick Lidstone, Chip Lion, and Kevin Shepherd, based upon which we rewrote many parts of this article to add new grammatical errors and fallacious conclusions for which those commenters are not responsible.

  3. Texas Top Cop Shop, Inc., et al v. Garland et al. 4:24-cv-00478 – ALM (U.S. E. D. Texas (Sherman)). We below make reference to certain pleadings and other documents by reference to the document docket numbers.

  4. Plaintiffs are Texas Top Cop Shop, Inc.; Russell Straayer; Mustardseed Livestock, LLC; Libertarian Party of Mississippi; National Federation Of Independent Business, Inc.; and Data Comm For Business, Inc.

  5. The preliminary injunction purports to enjoin the CTA everywhere it may apply, hence nationwide. The government and some courts discuss injunctions of this breadth as “universal” injunctions because they also apply to all potentially affected, and not just the plaintiffs.

  6. D.C. Doc. 31, Top Cop District Litigation amended for a minor clarification on December 5, 2024 by Doc. 33.; Texas Top Cop Shop, Inc. v. Garland,__ F. Supp. 3d __, 2024 U.S. Dist. LEXIS 218294, 2024 WL 4953814 (E.D. Tex. Dec. 3, 2024, amended Dec. 5, 2024).

  7. FinCEN has been posting information on its position with respect to filing requirements as “Alerts” (“BOI Alerts”) on its BOI Beneficial Ownership Information Homepage (https://www.fincen.gov/boi). As circumstances change, FinCEN replaces BOI Alert, so that references in this paper will be to BOI Alerts updated to a specific date. In this case, the BOI Alert is BOI Alert (December 6, 2024),  Impact of Ongoing Litigation – Deadline Stay – Voluntary Submission Only (“While this litigation is ongoing, FinCEN will comply with the order issued by the U.S. District Court for the Eastern District of Texas for as long as it remains in effect. Therefore, reporting companies are not currently required to file their beneficial ownership information with FinCEN and will not be subject to liability if they fail to do so while the preliminary injunction remains in effect. Nevertheless, reporting companies may continue to voluntarily submit beneficial ownership information reports.”). Although superseded BOI Alerts such as this one are no longer available on BOI Beneficial Ownership Information Homepage, they may helpful background on how FinCEN’s position evolved and provide useful guidance as to how FinCEN may respond to a lifting of the preliminary injunction.

  8. D.C. Doc., 32, Top Cop District Litigation amended for a minor clarification on December 6, 2024 by Document 34.

  9. D.C. Doc. 35.

  10. D.C. Doc. 36.

  11. D.C. Doc. 37.

  12. D.C. Doc. 38.

  13. D.C. Doc.40; Texas Top Cop Shop, Inc. v. Garland, __ F. Supp. 3d __, 2024 U.S. Dist. LEXIS 227810 (E.D. Tex. Dec. 17, 2024).

  14. Texas Top Cop Shop, Inc., et al v. Garland et al. 24-40792 (Fifth Cir.).

  15. C.A. Doc. 21, Top Cop Fifth Circuit Litigation Document 21 in which the government prayed that the preliminary injunction be stayed during the appeal or, “[i]n the alternative, the injunction should be narrowed to the companies that have been specifically identified in the district court or, at a minimum, to members of NFIB [National Federation of Independent Business].”

  16. C.A. Doc. 25.

  17. C.A. Doc. 34. During the period that the motions panel was considering the government motions, over a dozen non-parties sought to file amicus briefs in support of the plaintiffs-appellants.

  18. C.A. Doc. 100.

  19. C.A. Doc. 140. 2024 U.S. App. LEXIS 32565 (Fifth Cir. Dec. 23, 2024) (appeal from the U.S. District Court for the Eastern District of Texas). The panel consisted of Judges Stewart, Haynes, and Higginson. All three agreed to stay (i.e., rescind) the nationwide preliminary injunction, but Judge Haynes would have preserved it for the benefit of the parties before the court as had the court in NSBU. The opinion noted,

    Judge Haynes joins in part and disagrees in part. She agrees for an expedited appeal and agrees that a national injunction is not appropriate here, so she would grant a temporary stay of the preliminary injunction pending the decision of the merits panel regarding whether to deny a stay pending appeal as to the non-parties. However, she would deny the temporary stay as to the parties (while, of course, deferring to the merits panel on this point as well), including the members of NFIB, as long as their identities are disclosed to the government.

    Id. at n.1.

  20. Id. at n.7 (“The Businesses warn that lifting the district court’s injunction days before the compliance deadline would place an undue burden on them. They fail to note, however, that they only filed suit in May 2024 and the district court’s preliminary injunction has only been in place for less than three weeks as compared to the nearly four years that the Businesses have had to prepare since Congress enacted the CTA, as well as the year since FinCEN announced the reporting deadline.”).

  21. BOI Alert (December 23, 2024) Alert: Updates to Beneficial Ownership Information Reporting Deadlines—Beneficial Ownership Information Reporting Requirements Now in Effect, with Deadline Extensions.

  22. C.A. Doc. 142.

  23. C.A. Doc. 147.

  24. C.A. Doc. 160 (“in order to preserve the constitutional status quo while the merits panel considers the parties’ weighty substantive arguments, that part of the motions-panel order granting the Government’s motion to stay the district court’s preliminary injunction enjoining enforcement of the CTA and the Reporting Rule is VACATED.”).

  25. C.A. Doc. 163.

  26. C.A. Doc. 165.

  27. C.A. Docs. 174 (motion to withdraw petition) and 181 (granting the motion to withdraw petition).

  28. United States Supreme Court (24 A. 653) the docket of which is available at https://www.supremecourt.gov/docket/docketfiles/html/public/24a653.html.

  29. The Supreme Court Application for Stay is available at https://www.supremecourt.gov/DocketPDF/24/24A653/336329/20241231163238372_24aGarland%20v%20Texas%20Top%20Cop%20Shop. Supreme Court Application for Stay p. 1, praying “for a stay of the preliminary injunction issued by the U.S. District Court for the Eastern District of Texas (App., infra, 19a-97a), pending the consideration and disposition of the government’s appeal to the United States Court of Appeals for the Fifth Circuit and, if the court of appeals affirms in whole or in part, pending the timely filing and disposition of a petition for a writ of certiorari and any further proceedings in this Court.”

  30. Supreme Court Application for Stay pp. 10-13.

  31. Supreme Court Application for Stay pp. 13-16.

  32. Supreme Court Application for Stay pp. 17-25.

  33. See, e.g., Supreme Court Application for Stay pp. 20 (“Congress has often required private individuals and entities to provide information to the government, and this Court has upheld many such requirements under the Necessary and Proper Clause.”).

  34. Supreme Court Application for Stay pp. 25-26.

  35. Supreme Court Application for Stay pp. 30-31.

  36. Supreme Court Application for Stay pp. 31-36.

  37. Supreme Court Application for Stay pp. 36-38.

  38. Future pleading will appear on the docket for the case at https://www.supremecourt.gov/docket/docketfiles/html/public/24a653.html.

    =https://www.supremecourt.gov/DocketPDF/24/24A653/336997/20250110130810648_Garland%20v%20TTCS%20No%2024A653%20Respondents%20Response%20in%20Opposition%20to%20Application%20for%20Stay.pdf

     

    https://www.supremecourt.gov/DocketPDF/24/24A653/337159/20250113150232824_Texas%20Top%20Cop%20Shop%20Reply.pdf

  39. 31 U.S.C. § 5336.

  40. This article employs the term used FinCEN and the courts in the litigation described herein for the regulations implementing the reporting provisions of the CTA, although there are many rules within these regulations, and they have been released in more than one adoption. The Reporting Rule appears at 31 C.F.R. §§ 1010.380(a)(1) et seq. The “final” beneficial ownership reporting rules were released in Beneficial Ownership Information Reporting Requirements, 87 Fed. Reg. 59,498 (Sept. 30, 2022). Those “final” regulations detail certain due dates, amended by Beneficial Ownership Information Reporting Deadline Extension for Reporting Companies Created or Registered in 2024, 88 Fed. Reg. 66,730 (Sept. 28, 2023); supplemented with regard to the use of FinCEN identifiers by the release of Use of FinCEN Identifiers for Reporting Beneficial Ownership Information of Entities, 88 Fed. Reg. 76,995 (Nov. 8, 2023); and expanded with regard to the exemption for public utilities (31 C.F.R. § 1010.380(c)(2)(xvi)) in Update of the Public Utility Exemption Under the Beneficial Ownership Information Reporting Rule, 89 Fed. Reg. 83,782 (Oct. 18, 2024)—collectively, the “Reporting Rule.”

  41. Subject to certain exemptions, a reporting company is

    a corporation, limited liability company, or other similar entity that is . . . created by the filing of a document with a secretary of state or a similar office under the law of a State or Indian Tribe or . . . formed under the law of a foreign country and registered to do business in the United States by the filing of a document with a secretary of state or a similar office under the laws of a State or Indian Tribe.

    31 U.S.C. § 5336(a)(11).

  42. In this article, created or registered refers to the act by which an organization becomes a reporting company, as defined above. If an organization ceases to be exempt from the CTA reporting regime, it is unclear how the rules discussed in this article apply. The Reporting Rule provides that “[a]ny entity that no longer meets the criteria for any exemption under paragraph (c)(2) of this section shall file a report within 30 calendar days after the date that it no longer meets the criteria for any exemption.” 31 C.F.R. § 1010.380(a)(1)(iv). The CTA does not expressly address this situation, providing limited updating requirements for certain exempt entities having an ownership interest in a reporting company (31 U.S.C. § 5336(b)(2)(B)) or being an exempt entity by reason of the inactive entity exception. Newly nonexempt organizations should have been protected during the nationwide preliminary injunction in the same way as are entities that have been created or registered.

  43. 31 U.S.C. § 5336(b)(1)(C).

  44. As originally promulgated, the Reporting Rule would have required all initial BOIRs filed for reporting companies created on or after January 1, 2024, to be filed within thirty days. That deadline was extended to ninety days. Beneficial Ownership Information Reporting Deadline Extension for Reporting Companies Created or Registered in 2024, supra note 21.

  45. 31 U.S.C. § 5336(b)(4)(B).

  46. The CTA instructs FinCEN to develop regulations that will “to the greatest extent practicable . . . confirm[] beneficial ownership information provided to financial institutions to facilitate the compliance of the financial institutions with anti-money laundering, countering the financing of terrorism, and customer due diligence requirements under applicable law.” 31 U.S.C. § 5336(b)(1)(F)(iv)(II). The banking community, having the greatest access to the financial operations of its customers, is very interested in being able to shift the responsibility for customer due diligence to others.

  47. A homeowners association that is tax-exempt under I.R.C. §501(c)(4) is exempt from CTA filing while one that is tax-exempt under I.R.C. §528 is not exempt from CTA filing, although both homeowners associations may otherwise be identical. See FinCEN FAQ C.10 (June 10, 2024) at https://www.fincen.gov/boi-faqs#C_10.

  48. See Thomas E. Rutledge & Robert R. Keatinge, LLPs Are Not CTA Reporting Companies, Bus. L. Today (Oct. 10, 2024).

  49. See The Heritage Foundation, Project 2025, Mandate for Leadership: The Conservative Promise 707–08 (2023) (“Congress should repeal the Corporate Transparency Act, and FinCEN should withdraw its poorly written and overbroad beneficial ownership reporting rules. Both are targeted at the smallest businesses in the U.S. (those with 20 or fewer employees) and will do nothing material to impede criminal finance. The FinCEN beneficial ownership reporting rules will impose costs exceeding $1 billion annually and is exceedingly poorly drafted. FinCEN itself estimates that more than 33 million businesses will be affected and that costs will be $547 million to $8.1 billion annually.”).

  50. 721 F. Supp. 3d 1260 (N.D. Ala. 2024), appeal filed, Nat’l Small Bus. United v. U.S. Dep’t of the Treasury, No. 24-10736 (11th Cir. Mar. 11, 2024).

  51. BOI Alert (Jan. 2, 2025) Alert: Notice Regarding National Small Business United v. Yellen, No. 5:22-cv-01448 (N.D. Ala.), (“[T]he government is not currently enforcing the Corporate Transparency Act against the plaintiffs in that action: Isaac Winkles, reporting companies for which Isaac Winkles is the beneficial owner or applicant, the National Small Business Association, and members of the National Small Business Association (as of March 1, 2024). Those individuals and entities are not required to report beneficial ownership information to FinCEN at this time.”).

  52. Nat’l Small Bus. United, No. 24-10736. Oral argument of the case took place on September 27, 2024.

  53. BOI Alert (undated) Alert: FinCEN Has Issued Five Notices Extending the Filing Deadlines to Submit BOI Reports for Certain Reporting Companies in Response to Hurricane Milton, Hurricane Helene, Hurricane Debby, Hurricane Beryl, and Hurricane Francine, FinCEN (last visited Jan. 3, 2025).

  54. See Firestone v. Yellen, 134 A.F.T.R.2d 2024, 5683, 2024 WL 4250192, 2024 U.S. Dist. LEXIS 170085 (Sept. 20, 2024); Cmty. Ass’n Inst. v. Yellen, 2024 WL 4571412, 2024 U.S. Dist. LEXIS 193958 (D. Or. Oct. 24, 2024). These decisions have been appealed to, respectively, the U.S. Courts of Appeal for the Ninth and Fourth Circuits.

  55. As initially introduced on December 17, 2024, 118 H.R. 10545 provided at section 122:

    Extension of Filing Deadline for Certain Pre-Existing Reporting Companies. Section 5336(b)(1)(B) of title 31, United States Code, is amended by striking “before the effective date of the regulations prescribed under this subsection shall, in a timely manner, and not later than 2 years after the effective date of the regulations prescribed under this subsection,” and inserting “before January 1, 2024, shall, not later than January 1, 2026.”

    As a result of political jockeying, this provision was not included in the final bill, which was enacted. See also Katie Lobosco & Tami Luhby, Here’s What’s In and Out of the Government Funding Agreement, CNN Pol. (Dec. 21, 2024).

  56. Three branches of government counts the brief skirmish over the continuing resolution, discussed above.

  57. The CTA provides thus:

    In accordance with regulations prescribed by the Secretary of the Treasury, any reporting company that has been formed or registered before the effective date of the regulations prescribed under this subsection shall, in a timely manner, and not later than 2 years after the effective date of the regulations prescribed under this subsection, submit to FinCEN a [BOIR].

    31 U.S.C. § 5336(b)(1)(B). This potential two-year period (which would have expired on January 1, 2026) was reduced by the Reporting Rule to one year after the effective date of the Reporting Rule. 31 C.F.R. § 1010.380(a)(1)(iii) (“Any domestic reporting company created before January 1, 2024 and any entity that became a foreign reporting company before January 1, 2024 shall file a report not later than January 1, 2025.”). BOI Alert (December 23, 2024), Alert: Updates to Beneficial Ownership Information Reporting Deadlines—Beneficial Ownership Information Reporting Requirements Now in Effect, with Deadline Extensions, provided, “Reporting companies that were created or registered prior to January 1, 2024 have until January 13, 2025 to file their initial beneficial ownership information reports with FinCEN. (These companies would otherwise have been required to report by January 1, 2025.)” FinCEN (Dec. 23, 2004).

  58. The CTA provides that “[i]n accordance with regulations prescribed by the Secretary of the Treasury, any reporting company that has been formed or registered after the effective date of the regulations promulgated under this subsection shall, at the time of formation or registration, submit to FinCEN a [BOIR].” 31 U.S.C. § 5336(b)(1)(C).

  59. Reporting companies created or registered in the United States on or after September 4, 2024, that had a filing deadline between December 3, 2024, and December 23, 2024, were given until January 13, 2025 to file their initial BOIRs with FinCEN.

  60. These reporting companies were obligated to timely file their initial BOIRs before the temporary injunction issued. This simply confirms that while the temporary injunction provided relief for those for whom the deadline had not yet arrived, FinCEN took the position after the stay of the preliminary injunction that the injunction did not affect the due date for those already not in compliance with the deadline.

  61. Reporting companies created or registered in the United States on or after December 3, 2024, and on or before December 23, 2024, were given an additional twenty-one days from their original filing deadline to file their initial BOIRs with FinCEN.

  62. Reporting companies created or registered in the United States on or after December 24, 2024, and on or before December 31, 2024, were given 90 to file their initial BOIRs with FinCEN.

  63. 31 U.S.C. § 5336(b)(3)(ii) and 31 C.F.R. § 1010.380(b)(4)(ii) require those individuals and reporting companies that choose to obtain a FinCEN identifier to update the information that they have supplied in order to obtain the FinCEN identifier to reflect changes and corrections within thirty calendar days. Presumably, the nationwide preliminary injunction suspended enforcement of penalties for violating this requirement, but nothing in BOI Alert (December 23, 2024) explicitly tolled this thirty-day requirement.

  64. See BOI Alert (December 31, 2024) see note 7 Alert: Impact of Ongoing Litigation—Deadline Stay—Voluntary Submission Only, provided the following information:

    On December 23, 2024, a panel of the U.S. Court of Appeals for the Fifth Circuit granted a stay of the district court’s preliminary injunction entered in the case of Texas Top Cop Shop, Inc. v. Garland, pending the outcome of the Department of the Treasury’s ongoing appeal of the district court’s order. FinCEN immediately issued an alert notifying the public of this ruling, and recognizing that reporting companies may have needed additional time to comply with beneficial ownership reporting requirements, FinCEN extended reporting deadlines. On December 26, 2024, however, a different panel of the U.S. Court of Appeals for the Fifth Circuit issued an order vacating the Court’s December 23, 2024 order granting a stay of the preliminary injunction. Accordingly, as of December 26, 2024, the injunction issued by the district court in Texas Top Cop Shop, Inc. v. Garland is in effect and reporting companies are not currently required to file beneficial ownership information with FinCEN.

  65. In its Supreme Court Application for a Stay of the Injunction Issued By the United States District Court for the Eastern District of Texas at page 9 (“Recognizing that reporting companies may need additional time to comply with the Act given the period when the preliminary injunction was in effect, FinCEN extended the reporting deadlines in certain respects, including by extending the deadline for entities formed before 2024 from January 1, 2025, to January 13, 2025. See C.A. Doc. 105 at 1-2, NSBU v. United States Department of the Treasury, No. 24-10736 (11th Cir. Dec. 24, 2024).”).

  66. It is reported that ss of January 3, 2025, FinCEN had received some 13.7 million BOIR filings (although it uncertain how many of those filings were initial BOIRs of existing entities).

  67. This was subsequently undone by the Top Cop Fifth Circuit Court Order.

  68. As recently noted by Jay Adkisson, the information required by the CTA is “no more onerous than one arranging an international flight.” Jay Adkisson, Unusual Fifth Circuit Self-Reversal Sows Confusion for BOI Reporting, Forbes (updated Dec. 30, 2024).

  69. See Am. Bar Ass’n, Resolution 100 (adopted Aug. 2023); see also Robert R. Keatinge, Comments on Changes to Rule 1.16, SSRN (Oct. 4, 2024).

  70. The prior administration published support for the CTA. See Statement of Administration Policy: H.R. 2513—Corporate Transparency Act of 2019, as Amended by Manager’s Amendment, Am. Presidency Project (Oct. 22, 2019). The present administration doubled down on that support when the Solicitor General signed onto the New Years’ Eve Supreme Court filing defending the CTA and seeking the stay or modification of the preliminary injunction. It is worthy of note that many cite the support expressed by Marco Rubio, the presumptive incoming secretary of state, for the CTA. Press Release, Sen. Marco Rubio, Rubio, Colleagues Urge Treasury to Fully Implement Corporate Transparency Act (May 10, 2022). A letter sent by Senators Rubio and Elizabeth Warren to U.S. Treasury Secretary Janet Yellen and FinCEN calls for implementation of “Rubio’s Corporate Transparency Act (CTA), which was signed into law in 2020 (P.L. 116-283).” Id. In considering the importance of this position in the incoming administration, it should be noted that the letter not only was coauthored by Warren (D-MA) but also was cosigned by Senators Chuck Grassley (R-IA), Sheldon Whitehouse (D-RI), Ron Wyden (D-OR), Bob Menendez (D-NJ), and Bill Cassidy (R-LA). It is unclear whether bipartisan support for the CTA will be a benchmark of the incoming administration, or whether those legislators who previously supported and defended it will change their position if the new administration signals otherwise.

    .

  71. One of the clearest examples is the conflict between the requirement that the BOIR be true, complete, and correct and the fact that at times it will be impossible to obtain the information required to be included. Rather than craft a workable resolution of this conundrum, FinCEN ignores the problem because it is inconvenient. See Notice of Information Collection; Request for Comments, 88 Fed. Reg. 67,443 (Sept. 29, 2023) (FinCEN effectively says that allowing a partial filing with a description of unavailable information “would incorrectly suggest to filers that it is optional to report required information, and that reporting companies need not conduct a diligent inquiry to comply with their reporting obligations.”). Thus, rather than providing guidance to clarify that ongoing diligence is necessary, the Reporting Rule simply disregards the problem. See also Robert R. Keatinge & Thomas E. Rutledge, Impossible Things: Compliance with the Corporate Transparency Act When Beneficial Owners or Company Applicants Are Nonresponsive, Bus. L. Today (Dec. 16, 2024).

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